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Thai entrepreneurs in Kunming Opportunities for Thais via the Laos -China Railway

After the Laos-China Railway has been in operation for more than 2 years (since December 2021), the number of tourists visiting Laos increased by 285 percent last year, or approximately 2.4 million people, while the number of freight trains has increased from two to 14 at first. The increase in the number of freight train trips has a significant impact on the trade between Laos and China, driving the trade value between Laos and China to US$4.39 billion from January to August 2023 [1]. Such cross-border transportation is an important opportunity for Thailand to shorten the delivery time to China, which previously could have been transported via land routes such as R3A from Chiang Rai Province, which could take 2-3 days to reach China, or by sea, which could take 15-20 days, while the Laos-China Railway only takes 15 hours.

[1] Office of International Trade Promotion in Vientiane, Lao PDR. 2023. Laos-China Railway, a Powerhouse for Economic and Social Development of the Region. Accessed January 23, 2024, from https://www.ditp.go.th/post/157009.

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Whose opportunity is this?

On January 11, 2024, the research team of the China-Laos Railway project had the opportunity to travel to explore along the Laos-China Railway route and meet and talk with Thai trade promotion officials in Kunming as well as Thai entrepreneurs in Kunming. The Thai retail and wholesale entrepreneur Yunnankan-Thai Guangda Trading Company set up a retail store at YUNFANG Mall, which has a sign out front saying Thai Distribution Center in Kunming. Inside the room is full of grocery stores selling Thai products and wooden decorations, including machinery. Outside, there are rows of restaurants with strange Thai names or missing spaces in spelling, such as "Fat People", "Lime Favorite", and "Southeast Asia". Inside the mall, there is only the first floor with products from Thailand, most of which are owned by Chinese people. While there are only 3 grocery stores owned by Thai people, one of which is Yunnankan-Thai Guangda Trading, which has opened a storefront under the name "Kinnaree" for more than 17 years and has been in service through all kinds of difficulties and obstacles, from trying to import products in accordance with Chinese law to managing the transportation system. The problem of the import system that relies on the discretion of the officials in considering makes each import difficult and may also have some additional costs. However, Mr. Chon, one of the company's pioneers, added that since 2022, China has had the GACC system or General Administration of Customs of the People's Republic of China, which is a registration system for food manufacturers exporting to China. This makes importing and exporting easier because it is checked by an AI system. The development of this system makes importing goods from Thailand to China a convenient and fast system that complies with the specified standards without the discretion of the officials. In terms of current transportation, most goods are containers via Guangzhou Port because they are cheap and most goods are dry goods that are not at risk of spoilage or expiration easily. However, Mr. Chon gave information that the company currently does not have transportation via the Laos-China Railway because there are still few players on this route, resulting in high transportation costs, which further increases the cost of goods. Mr. Chon believes that if transportation costs are lower, sending goods via the Laos-China Railway may be another option that the company will choose in the future.

The research team further discussed with the Office of International Trade Promotion in Kunming on the issue of opportunities for entrepreneurs via the Laos-China Railway. One officer provided information that products exported from Thailand via the railway are fresh fruits such as durian and mangosteen, but currently, there is only one Thai company exporting products via the Laos-China Railway to Kunming. Most of the transportation between the railway routes is by Chinese entrepreneurs exporting from China to Thailand, which may be due to several limitations that prevent Thai entrepreneurs from entering the competitive market for transporting goods via the Laos-China Railway. First, the inability to access the Chinese market, which is a major factor for investors or entrepreneurs. Second, there are several limitations from Chinese standards, such as products not meeting Chinese standards or not yet being certified to meet Chinese standards, and there may also be no international negotiations to promote product exports. This is consistent with information received from entrepreneurs regarding problems with importing certain types of raw materials, such as basil leaves and kaffir lime leaves. Another important factor is that the transport of goods via the Laos-China Railway in containers with plug-in power using electricity from the main generator must be certified by the China Classification Society (CSS) and the destination country. It will be possible to use the Laos-China railway. Thirdly, the transportation cost via this route is quite high and it is necessary to transport goods through the Vientiane Logistics Park: VLP in the Thanaleng area in Vientiane Capital, which is the transit point for goods between Thailand and Laos. This is one of the reasons that transporters have to pay more. Therefore, the opportunity for Thai entrepreneurs to increase is still a matter of negotiation between the Chinese-Laos-Thai governments to create cooperation in both reducing certain expenses or even cooperation in marketing and products to promote more exports.

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After the opening of the Laos-China railway and successfully unlocking Laos from a landlocked country to a connected country with Chinese railway technology, the challenges of building China's railway in Laos have demonstrated the potential and capabilities of railway science to the world, and many people have benefited from the use of the railway. Throughout the journey of the research project, we have seen many Lao, Chinese and Thai people using the railway to travel to cities across the country, as well as international tourists who want to travel in both Laos and China.

It can be seen that during the period when the Thai-Chinese high-speed railway was gradually under construction, the Laos-China railway, which has already begun operation, is considered another important tangible project that has resulted in both positive and negative social and economic changes in Laos, including the construction of railway projects through cooperation with China in many other countries in Southeast Asia that are about to happen as well.

พื้นหลังสีขาว

* This work is part of the research information dissemination activity to the public under the project "Cross-border China Railway: A Comparative Study of the Impacts of Railway Construction Projects on Communities Around Main Stations in Thailand and Laos", funded by the Office of the Higher Education, Science, Research and Innovation Policy Council (NSTDA) by the Human Resource Development and Institutional Development Fund Management Unit (NHRC) for fiscal years 2021 - 2023.

** The research project is currently underway. The published content is part of the data collection and is not a conclusion of the research results.

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Phanitda Saiyoras

Project Leader

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Plaifha Namphrai

Research Assistant

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Kesone Kanhalikham

Research Assistant

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